SINGAPORE: Copper prices rose on Tuesday, with Shanghai copper touching a near two-week high, as top consumer China surprisingly reported an expansion in factory activities this month.
The Purchasing Managers’ Index for China rose to 52 in March from the collapse to a record low of 35.7 in February, official data showed, much higher than a Reuters poll’ forecast of 45.0. The most-traded copper contract on the Shanghai Futures Exchange (ShFE) rose as much as 2.2% to 39,600 yuan ($5,578.56) a tonne, its highest since March 18.
Three-month copper on the London Metal Exchange (LME) was up 1.5% to $4,838.50 a tonne, as of 0124 GMT, reversing a streak of three straight losses. However, the longer-term outlook for copper, often used as a gauge of the global economic health, is still seen under pressure due to prolonged worldwide shutdowns to contain the coronavirus pandemic.
LME copper, despite the rally on Tuesday, was down 14.2% on a monthly basis, on track for its worst monthly decline since September 2011.
LA PAZ: Bolivia‘s San Cristobal mine, a huge desposit of zinc, lead and silver, has suspended operations after the country imposed tough rules to halt the spread of coronavirus, its operator Minera San Cristobal said in a statement on Friday.
The company, a wholly-owned subsidiary of Japana’s Sumitomo Corporation, said it would impose a “temporary suspension of the production and export of concentrated zinc, lead and silver minerals” following the government measures.
Bolivia’s interim government said earlier this week it would extend an obligatory quarantine period until mid-April, close the country’s border and tighten further the movement of people in light of the global pandemic.
Minera San Cristobal added in a statement posted on Twitter that the move came “in the face of the spread of the COVID-19 virus, and as a precaution for the health and life of workers.”
The open-pit mine is located in Bolivia’s Potosi department near the border with Chile, and is the source of about half of the landlocked country’s mining exports.
A skeleton crew of workers was completing the last exports Friday and carrying out maintenance work, the operator said.
SANTIAGO: Chile‘s state-run Codelco said on Friday output had dropped 5.3% in 2019, driving profits down sharply as the world’s top copper producer continues to battle with rising costs and falling ore grades at its aging deposits.
Codelco said in end-of-year results it produced 1.59 million tonnes from its wholly owned mines in 2019, and that profits had fallen 17% from the previous year to $1.34 billion. Direct cash costs rose 1.8%, the company said.
The fall in profits was due “principally to lower gross margins, the downward tendency of copper prices, a reduction in physical sales of copper and molybdenum and weak results obtained from associated investments,” the company told regulators.
The poor showing puts Codelco in a tight spot as the impact of the coronavirus outbreak begins to bite in Chile. Chile has confirmed more than 1,600 cases, among the highest tallies in Latin America, while the price of copper is at a four-year-low.
The spread of the virus earlier this week forced Codelco to put on hold parts of a 10-year, $40 billion plan to boost output from its aging mines.
“This enormous crisis has hit the copper price with force, driving it down to historic lows, while demand for the red metal decreases day after day,” the company said in a statement accompanying its results. “Codelco is working to preserve operational continuity, liquidity, and financial wellbeing.”
The mining company’s sprawling deposits, scattered across central and northern Chile, continue to operate with reduced staff, though unions this week ratcheted up pressure to shut down to safeguard workers.
New Delhi: The performance of Indian steel players is likely to be affected in the first quarter of 2020-21 due to the coronavirus outbreak and the subsequent nationwide lockdown, according to ICRA. Domestic firms may have to face challenges such as weak domestic demand, which is likely to lead to inventory pile-up exerting pressure on steel prices, the ratings agency said in a statement.
“The outbreak of coronavirus and associated lockdown will keep both production and consumption under check in Q1 (first quarter) FY21. As a result of Covid-19 pandemic and the 21-day nationwide lockdown, the performance of domestic steel makers is likely to be adversely impacted in Q1 FY21,” it said.
Jayanta Roy, Senior Vice President and Group Head, ICRA said the Covid-19 and slowing Chinese demand will affect global steel demand-supply balance in the near term.
In the domestic scenario, the key demand drivers –construction and infrastructure sectors — besides the automobile and capital goods sectors, continue to witness muted or negative growth, Roy said.
As far as exports are concerned, Icra said, the rapid spread of the outbreak to countries other than China has disrupted the seaborne steel trade, and the same is likely to fall further amid the looming uncertainty surrounding global growth.
As for imports, the increased scrutiny of shipments and weakened position of the rupee are expected to keep them low.
The rally witnessed in domestic steel prices since November 2019 is based on supportive international prices, but this is likely to halt due to the outbreak.
The agency also noted that domestic hot rolled coil(HRC) prices stood at Rs 38,000/MT in March 2020, and given the low demand amid the lockdown, a correction looks highly likely only in the next quarter.
Roy said: “We are not expecting a rebound in steel consumption growth in FY2021. As against a growth rate of 3.8 per cent in FY2020, consumption growth is likely to settle at around 2-3 per cent in FY2021, given that Q1 could be a very weak quarter. Margin improvement is unlikely in FY2021.”